US investors remain the dominant overseas buyers in the prime central London property market, and have overtaken Chinese buyers in the latest figures.
Investors in prime markets, particularly prime central London, tend to be more sensitive to sentiment changes than other parts of the housing market, which are driven by needs-based buyers.
As a result, particularly in light of rising mortgage costs and affordability constraints, prime central London has been on of the slowest growing segments of the housing market in terms of property prices. According to research from Savills, prices in prime central London ended 2024 down -20.7% compared to the peak of the market in 2014 (ranging from -9.6% in Bayswater to -26.3% in Earls Court).
With softening prices, some investors have used the drop in competition to take advantage of the market and secure homes at lower prices. This is particularly the case for overseas buyers, including US investors, who tend to make up a large proportion of cash buyers in the city and are therefore less impacted by higher borrowing costs.
However, Savills also predicts that despite short-term downward pressure on prices in PCL – linked mainly to the abolition of ‘non-dom’ status as well as increases in stamp duty – which could see prices fall by a further 4% this year, the market is expected to recover in the long-term, with Savills predicting five-year cumulative price rises of 9.6%.
Furthermore, London remains one of the most sought-after investment locations in spite of pricing challenges for international buyers, being the economic and cultural centre of the UK with a strategic position in Europe, which holds up demand for property in the capital.
US investors in particular are drawn to prime central London’s property market, and new research from Knight Frank has revealed that the number of US investors in this market segment increased between 2023 and 2024 – with US nationals making up 11.6% of all overseas buyers in PCL in 2024, higher than any other overseas location.
US investors overtake Chinese buyers in PCL
Investors from China and Hong Kong remain one of the most predominant overseas buyers in London and indeed the UK, but Knight Frank’s research revealed that US investors actually overtook Chinese buyers in prime central London last year. Chinese buyer numbers fell between 2023 and 2024, and they only made up 8.1% of total overseas investors last year.
One major draw for US investors over recent years has been the strength of the dollar in relation to the pound, making the UK a particularly attractive investment landscape.
Knight Frank notes that since July 2014, US dollar-denominated or pegged buyers have received an effective discount of around 38% in prime central London – which takes both currency and house price movements into account.
Estate agency Winkworth has also noted a surge in traffic from prospective US investors in recent years, recording a 30% uplift in visits in 2024 compared with 2023.
Christian Lock-Necrews, from Winkworth’s Knightsbridge, Chelsea and Belgravia office, said: “There are some very significant sales agreed with American buyers taking advantage of the currency play, many believing the lower levels of competition in the London market and strength of the dollar has allowed them to buy at a low point.
“Typically, the profile of these US families has been mainly from the film and media world, under 50 years of age, or entrepreneurs where they have no ties to a particular location, and still like the familiarly of what London has to offer. The market is providing opportunities in both respects.”
UK property investment offers stability
The UK property market as a whole has long since been regarded as a ‘safe haven’ for overseas property investors, particularly from the US and China. The market itself shows continued long-term price growth, while the economy and political position tend to offer a strong level of stability.
Knight Frank notes: “The UK could benefit as a location for overseas investment if it avoids getting caught in the crossfire of a trade war between the US and the EU by playing the ‘stability’ card.”
At the end of this month, Chancellor Rachel Reeves will set out her Spring Statement, offering an update on her plans for the UK economy, while the Office for Budget Responsibility (OBR) will release its forecast for the year.
There has been some criticism levelled at the Chancellor relating to the UK’s stance on overseas investors in light of the Labour government’s new tax regime for non-domiciled individuals (those who live in the UK but have a permanent home abroad). Many fear the changes could deter some from investing in the UK when domiciled overseas.
The hope is that the message to overseas investors will be ‘softened’ in the upcoming announcement.
